304: Major Business Facility Job Tax Credit and Instructions (2025)
Virginia · Virginia Tax · Used for tax years 2025
Virginia Form 304 is an application for the Major Business Facility Job Tax Credit. It reports facility establishment or expansion details, qualifying employees, the credit amount, and any credit to be recaptured.
Who files this form
Businesses applying for the Major Business Facility Job Tax Credit must complete a separate Form 304 for each major business facility or qualified job expansion. Form 304 must be filed for a total of 6 taxable years following each expansion.
The text allows individuals, estates, trusts, corporations, banks, insurance companies, and telecommunications companies to claim the credit for taxable years beginning on or after January 1, 1995, but before July 1, 2025.
For expansion years beginning on or after January 1, 2010, the job thresholds are:
- Tier 1: 50 new jobs.
- Tier 2: 25 new jobs in an enterprise zone or a locality identified as economically distressed by the Virginia Economic Development Partnership.
Qualified job expansion requires creating the qualifying full-time jobs within a continuous 12-month period ending within the taxpayer’s taxable year. The credit applies to qualifying jobs above the applicable threshold, and only one tier may be claimed per facility.
A facility whose principal activity is retail does not qualify. Jobs used to qualify for an Enterprise Zone Job Creation Grant cannot also qualify for this credit.
When it's due
For the tax year 2025 application, the text gives relative deadlines rather than a calendar filing date:
- Form 304: Send it to the Tax Credit Unit at least 90 days before your tax return’s due date.
- Pass-through entities allocating the credit: File Form TCA within 30 days after the credit is granted, but at least 90 days before participants file their income tax returns.
A company cannot first file Form 304 and claim the credit until the first taxable year after the taxable year in which it established or expanded the qualifying facility.
What you'll need
Gather the following information and attachments:
- Business and facility details: Company name, FEIN, address, entity type, NAICS code, industry description, facility location, establishment or expansion date, and expansion and credit-year information. Include the physical address of each business location for all expansion facilities.
- Schedule A and the Schedule A Worksheet: Required for every filing year. The employee list must include names, hire dates, Social Security numbers, full months employed during the credit year, position descriptions or numbers, and weekly hours for part-time employees.
- Schedule B: Complete it for the credit year to calculate qualifying employees.
- Current-year Virginia Employment Commission quarterly employment reports: Use these to determine the current-year qualifying employee count.
- Schedule C: Required for Tier 1 and Tier 2 pass-through entities for each year a credit is earned. Include each recipient’s name, FEIN or SSN, address, credit percentage, and credit amount.
If applicable, also include:
- Virginia Schedule 500AC.
- An affiliated-company schedule with company names, Virginia account numbers, FEINs, NAICS codes, and voting percentages when jobs are aggregated.
- A statement showing each affiliated company’s prorated credit if those companies aggregated jobs but file separate Virginia returns.
- A schedule identifying the contractor or affiliated company for employees claimed from those businesses.
- A recapture computation schedule if Line 3b is less than Line 3a.
If you claim permanently assigned contractor or subcontractor employees, you must be able to provide evidence of an agreement preventing that contractor or subcontractor from claiming those same employees for this credit.
How to file
Complete and sign Form 304, attach the required schedules, and mail it to the address printed under “Where to File Form 304”:
Tax Credit Unit
Virginia Department of Taxation
P.O. Box 715
Richmond, Virginia 23219
The Department will send a certification letter confirming your credit amount. Do not enclose Form 304 with your tax return.
Pass-through entities allocating the credit must also file Form TCA. Send that information to:
Virginia Department of Taxation
ATTN: Tax Credit Unit
P.O. Box 715
Richmond, VA 23218-0715
Alternatively, fax the Form TCA information to (804) 774-3902. Do not both mail and fax it.
Pass-through entities must also complete Form 502 and give each participant a Schedule VK-1 and a copy of the certification letter. Participants are instructed to enclose the certification letter with their income tax returns.
Common mistakes
- Sending Form 304 with the tax return. The form specifically says not to do this.
- Combining facilities or expansions on one application. File a separate Form 304 for each facility or qualified job expansion.
- Stopping after the initial filing. Form 304 must be filed for 6 taxable years following each expansion, with Schedule A and the Schedule A Worksheet included every year.
- Reusing jobs covered by an Enterprise Zone Job Creation Grant. The form warns that those jobs do not qualify for this credit.
- Counting excluded positions. Seasonal or temporary jobs, jobs shifted from another Virginia location, and ancillary positions such as building maintenance or security do not qualify. No more than two qualifying part-time employees may be combined into one full-time equivalent.
- Ignoring a decrease in qualifying employment. A decrease during the 5 years after the credit year may require repayment of some or all of the credit through recapture.
- Missing Form TCA for a pass-through allocation. Failure to file it may cause the credit claim to be disallowed or delay a participant’s return. Do not send the same information by both mail and fax.
- Entering an email address without wanting email communications. Providing an email address gives consent to receive Department communications about this application by email.
Questions people ask
How much is the credit?
Subtract the applicable job threshold from the credit-year qualifying employee count, then multiply the result by $1,000. The text states that the credit is computed in the credit year and allowed over a 2-year period.
Can unused credit be refunded or carried forward?
The credit is nonrefundable. Any unused amount may be carried forward for the next 10 taxable years.
Can part-time or contractor employees count?
The hours of no more than two qualifying part-time employees may be combined to count as one full-time equivalent. Contractor or subcontractor employees may qualify if permanently assigned to the facility, and the taxpayer must be able to provide evidence of an agreement preventing the contractor or subcontractor from also claiming those employees for this credit.
Does employee turnover automatically cause recapture?
No. Recapture is based on the average number of qualifying full-time employees, not specific employees. Turnover does not cause recapture if average employment does not decrease.
Where can I get help?
Call the Virginia Department of Taxation’s Tax Credit Unit at (804) 786-2992. Forms and instructions are available at www.tax.virginia.gov or by calling (804) 367-8031.